Immigration Reform and the American Worker

If anything is going to wreck the current bipartisan push for comprehensive immigration reform, it’s the fact that many Americans are convinced that more immigration will be bad for American workers and for the U.S. economy. The spectre of masses of immigrants taking American jobs and driving down wages is a powerful one, especially at a time of stagnant incomes and still-high unemployment. That’s why, in a new work-trends survey released earlier this month, by the John Heldrich Center for Workforce Development, four in ten of those surveyed said that high unemployment is caused by “illegal immigrants taking jobs away from Americans.” Intuitive as this may seem (more workers means fewer job opportunities and lower wages), actual evidence that immigration drives down wages is hard to find. On the contrary, a host of studies have found that immigration has actually boosted wages for native-born American workers as a whole, and that while immigration has had a negative impact on the wages of one group—men without a high-school education—that impact has been surprisingly small. Taken as a whole, in fact, the numbers clearly suggest that immigration reform would be a genuine boon to the U.S. economy.

This is most obviously true when it comes to high-skilled workers, particularly so-called STEM (science, technology, engineering, and math) workers. As I wrote last summer, in the U.S. there has historically been a direct connection between immigration and entrepreneurship, and between immigration and innovation. Immigrants, particularly but not solely in the technology industry, have started companies at a disproportionate rate. And they have played a major role in fuelling innovation—in 2011, for instance, three-quarters of the patents from the country’s ten most prolific research universities had immigrants among their contributors. Skilled immigrants aren’t, as a group, taking jobs away from native-born workers. They’re creating them.

The problem is that American immigration policy in recent years has effectively worked to discourage highly skilled immigrants from staying here, as Vivek Wadhwa documents in his new book, “The Immigrant Exodus.” Because American immigration policy was never really designed with an eye toward economics, it’s riddled with a host of rules that effectively cap the number of skilled immigrants we allow in. The number of permanent employment-based visas is the same as it was in 1990, even though the U.S. economy is much bigger. We have annual caps on the number of visas we give to people from any one country, which in practice means that thousands of engineers and scientists from China and India, many of whom have gotten their degrees here, have to wait years for even a chance at a green card. And we don’t make it easy for people who are willing to commit capital to start businesses here to get green cards. Ross Eisenbrey, a vice-president at the Economic Policy Institute, argued in a New York Timesop-ed that the U.S. already has “too many high-tech workers.” But the notion that the U.S. economy would be better off if skilled engineers and scientists who trained here went elsewhere to ply their trades is downright curious.

Obama’s plan would go a long way toward remedying these problems—it would get rid of the annual country caps, expand the total number of visas for skilled workers, and give a green card to anyone who gets a master’s degree in science, math, or engineering from an American university, all of which are excellent ideas. My colleague John Cassidy has written skeptically about this last proposal, suggesting that this system would be subject to abuses and that the current system—in which immigrants need to be sponsored by a specific employer before they can get a permanent visa—serves a useful screening function. But while forcing skilled immigrants to be beholden to one employer may be good for businesses, it’s not great for workers. More importantly, limiting the freedom of skilled immigrants also limits how much they can contribute to the economy, particularly by starting businesses. None of the current proposals would scrap the existing employment-based system (in which skilled immigrants are given what are called H1-B visas) entirely. But anything that loosens the strings on skilled immigrants, and makes it easier for them to work where and how they want, would represent progress.

Of course, immigration isn’t only (or even mostly) about highly skilled workers. But even the immigration of unskilled workers seems to have been, on balance, beneficial to the economy as a whole. The biggest reason for this is that foreign-born workers turn out not to be perfect substitutes for American workers, which means that the two groups don’t often compete in the same job markets. Or, to put it differently, immigrants tend to concentrate in industries and job categories where native-born workers aren’t. As a result, the work they do tends to be complementary to the work Americans do rather than competing with it. And that, in turn, can make American workers more productive, which means that they can get paid more, and, in some cases, create jobs that would otherwise not exist. In the case of construction, for instance, immigrants tend to work as masons and bricklayers, which creates opportunities for crane operators and foremen, who are more likely to be native-born. More prosaically, and commonly, the fact that, in the restaurant industry, immigrants are willing to work, typically for low wages, as busboys, dishwashers, and deliverymen makes many restaurants viable businesses, which in turn allows them to employ native-born Americans to work as waiters and bartenders.

This helps explain why the economists Gianmarco Ottaviano and Giovanni Peri found that, between 1990 and 2004, immigration boosted the wages of most native-born workers, and why a recent study by Heidi Schierholz of the liberal Economic Policy Institute found that, between 1994 and 2007, immigration had a “small but positive” impact on the relative wages of Americans at all educational levels. Actually, the workers who are really hurt by new immigrants are earlier immigrants, since they do compete in the same job markets. In addition to the complementarity argument, there’s the simple fact that employed immigrants are themselves consumers of goods and services, and therefore help drive economic activity. And when it comes to immigration reform, a policy of amnesty would make it even less likely that immigrants would drive down wages, since undocumented workers are much easier for employers to push around, find it difficult (if not impossible) to unionize, and are more likely to accept below-market wages.

None of this is to say that immigration is a universal solvent for the U.S. economy, or that there aren’t American workers who have been hurt by competition with immigrants. It is to say that, on balance, comprehensive immigration reform will be a good thing for the economy, and that it’s as close to a win-win policy as you’re going to find in politics. And that’s not even to mention the fact that, in terms of improving overall human welfare, there are few policies devised that are as effective as lowering barriers to immigration. Workers who come to the U.S. see their wages and their standard of living boosted sharply simply by crossing the border. That’s a good thing, and one of the best arguments for immigration reform, even if you’ll rarely hear a politician make it.